Intea Fastigheter (Stockholm:INTEA B) Q3 2026 Earnings Call

0:01 Welcome to the presentation of InteA's Q3 report. My name is Charlotta Wallman-Hörlund and I'm the CEO of InteA. Next to me is our CFO, Magnus Ekström.

0:14 Good morning.

0:18 During the year, rising market interest rates have impacted the real estate sector in general. In such an environment, predictable and stable revenues, a well-balanced financing structure and properties that serve a clear societal function become particularly important. We are leaving a stable quarter behind us. We have now reached a property value of just over 30 billion while maintaining strong profitability. The company continues to develop according to plan. Rental income increased by just over 18% compared with the previous year. And growth in income from property management per Class A and Class B share amounted to 17.6% for the quarter.

1:11 We have issued three green bonds totaling almost 2 billion on attractive terms, while repurchasing bonds amounting to 1.1 billion under our existing MTM program. At the end of the third quarter, our hedge ratio was 102% with a fixed interest rate period of 3.6 years, limiting the impact of rising market interest rates on our average interest rate, cash flow and earnings. During the third quarter, we invested 370 million in ongoing projects. We completed our infrastructure project in Falköping, and in early October, we took possession of the Ångermanland District Court property in Härnösand.

1:57 More recently, we were also pleased to announce that we will be developing a new ambulance station in Trollhättan. I will return to that in a moment. But first, I'll hand over to Magnus, who will take you through the numbers.

2:13 Thank you, Lotta. And if we go to the numbers, this slide summarizes the period of January to September. And we now have a contracted rent of 1.8 billion. The property value has now reached over 30 billion. And we have a running yield of 5.8%. Rental income for the period increased and with a surplus ratio of 83.7%, we have a good cash flow from our operations. Our ICR for Q3 increased to 4.1 times and the LTV amounted to 47.7%. The growth for NRE per Class A and B share amounted to 16% and the growth for profit from property management amounted to just over 23%.

3:09 And if we look at the quarter, we had a good development in the Q3 with an increase in rental income of 18% and like to like to plus 2.9%. increase in NOI of just under 17% and like for like plus 0.7% and increase in profit from property management of around 90% as Lotta said in the beginning for Class A and B share 17.6%. And this is mainly driven by NOI from completed projects and acquisitions. We also had a positive impact from changes in value from investment properties of 147 million and a positive impact from changes in value from interest rate swaps of 349 million.

4:08 And this is mainly due to changes in long-term market in interest rates. And the tax is mainly deferred tax. and this gives us a profit after tax of 670 million for Q3.

4:29 Just over six years ago, Intia acquired the Falköping train depot located along Sweden's western main railway line. One year later, we reached an agreement with Västtrafik to expand the depot and double its capacity in two phases. The project has now been fully completed with the official inauguration taking place next week. The lease agreement runs until 2050. The investment in the final phase amounted to 245 million, with an annual rental value of 14 million. The new Ångermanland District Court in Härnösand has also been fully completed and we took possession of the property in early October. Both the investment volume and the annual rent have increased since we signed the acquisition in December last year. The investment now amounts to just over 270 million, an increase of approximately 50 million, while the annual rent has increased with 6 million to just over 19 million.

5:32 The latest addition to our project portfolio is a new ambulance station that we will develop in Trollhättan on behalf of the region in Västra Götaland. The new facility will comprise approximately 1,900 square meters and will be leased by the region under a 15-year lease agreement. The investment is estimated at approximately 50 million. We already own an ambulance station in Stockholm, where Region Stockholm is the tenant. It's therefore both logical and an exciting step for us to expand further with an additional ambulance station. We currently have projects under development totaling nearly 12.1 billion, of which 9.7 billion remains to be invested.

6:26 This slide shows two examples from our project portfolio. The first is the Gävle custody unit where we are developing almost 22,000 square meters on behalf of the Swedish Prison and Probation Service. The lease term is 25 years from completion. The investment is estimated at nearly 1.5 billion with an annual rental value of 96 million. Adjacent to the custody unit We are currently designing a new police station and together these facilities will form a justice center. The second project is the Kristianstad prison facility, a security class two prison for men, which is now almost completed.

7:14 The project has been delivered at record speed with construction having started as recently as August last year. The facility will add 192 prison places, an important contribution to the Swedish Prison and Probation Service's extensive expansion program. The prison comprises just over 11,000 square meters. The investment amounts to 760 million and the annual rent to 52 million. The lease agreement runs for 25 years. The project portfolio provides stable and predictable growth.

7:53 Just a slide of our project pipeline as of today. As Lotta said, the amount is just over 12 billion right now. and we have a 47% visible rental growth in our ongoing projects and it is fully financed through our balance sheet. We have a high average lease period in the pipeline and an estimated additional NY of 834 million. When completion of all projects, the rental value will be just over 2.7 billion. and the current yield on cost in the portfolio is 6.9%.

8:42 One of our goals is for more than 90% of the rental income to be derived from public sector tenants. At the end of the quarter, public sector tenants accounted for 97.1% of our rental income. The remaining average lease term for public sector tenants was 7.7 years. The lease maturity profile is illustrated in the chart in the center of the slide. 73% of our contracted annual rental income is CPI-linked. At the end of the quarter, annuity-based additional rents amounted to 236 million. Of the supplements maturing after 2031, which represent 51% of the total, The majority relates to three lease agreements with maturities between 2037 and 2049.

9:37 The property value has increased with just over 500 million during Q3, mainly from investments and increases in value on properties. And the current value, as we said in the beginning, is just over 30 billion right now. and the current yield is 5.8% and is based on our NY in the earning capacity. If you look at the cash flow, we have good cash flow from our operations. On the last 12 month basis, we have a cash flow from operating activities of just over 1 billion. and a total investment of approximately SEK 3.6 billion.

10:26 And maintenance capex is included in the investment for the last 12 months and amounted to SEK 78 million for the last 12 months. And we have a strong financial position with an LTE of just under 48%. Our ICR is 4.0 times for the last 12 months, and for the quarter, the ICR was 4.1 times. And if you look at the adjusted net depth EBITDA, where we exclude depth from projects, it amounted to 7.4 in Q3. So we are still in a good position for growth.

11:20 The APRA NRV per Class A and B share increased to just over 58 SEK per share. The profit from property management per Class A and B share increased to 1.16 SEK per share in the quarter and 4.37 SEK per share for the last 12 months. And if you look at the growth in EPRA NRV and profit from property management since 2018, the average growth was just over 17% for the NRV and around 21% for the profit from property management. We have a debt portfolio of 14.9 billion, and still a good mix between bank loan bonds and commercial papers.

12:16 Our interest rate amounted to 2.84% at the end of the period, and it's pretty much the same as in Q2. We have a high interest rate hedging ratio of 102%, and our duration amounted to 3.6 years at the end of the period. Our duration in depth maturity amounted to 3.8 years at the end of the period. And we have been active in the bond market, as Lotte said in the beginning, with an issue of new green bonds totaling just over 1.6 billion in the beginning of Q3 and with attractive terms.

13:02 At the same time, we carried out the buyback of 1.1 billion. And as a result of that, a large share of debt maturity within one year has been refinanced. We also issued a five year green bond of 300 million in August with good terms. And finally, we have good access to capital with unused credit facilities, facilities of just over 5 billion. And if we look at the bond market, the spread curve development has come up a bit during this quarter. However, the market is still very good. and as I said in the previous slide, we issued two green bonds totaling 1.65 billion with maturities of two and five years and the spreads of 60 and 109 bps.

14:03 And the bond we issued in August was a five-year maturity and a spread of 105 bps. And finally, if we look at the earning capacity, the profit from property management has increased with 16% year over year per class A and B share, and it's currently up to 4.42 SEK per share. And with that, I hand over to you, Lotta.

14:34 Thank you. Our extensive project portfolio provides stable and predictable growth. In addition, several of our tenants continue to require expanded and modernised premises, including refurbishments, extensions and new developments. This creates attractive opportunities to add new projects to the portfolio. We have a strong and well-balanced financial position with good access to capital. In summary, we are well positioned to navigate and capitalize on a more challenging market environment while continuing to create long term value. We have a strong pipeline and are now looking forward to an exciting finish to the year.

15:22 Thank you for listening.